tv Documentary RT January 3, 2018 12:30am-1:00am EST
and in the anti migrant a german m.p. is under investigation under after a twitter post of hers is blamed for inciting anti muslim hatred. r.t. dot com has more on those stories and others but right now it's cross talk as they delve into the queen's miraculous rise in the digital currency markets at. a low and welcome to cross talk where all things considered i'm peter lavelle bitcoin for some it's the perfect marriage of technology and finance for others it's a get rich scheme though no one can deny its market value was soaring and becoming an attractive alternative to the current global banking system is bitcoin
revolutionizing the world. across talking bitcoin i'm joined by my guest firesign in new york he is a fund manager and author of the book planet ponzi in atlantic we have jeffrey tucker he is director of content for the foundation for economic education and in cambridge we cross the garrick hileman he is a research fellow at the university of cambridge all right gentlemen crosstalk rules in effect that means you can jump in anytime you want and i always appreciate it gary let me go to you first in cambridge explain what is going on with bitcoin i mean i'm of the age and i used to work in finance i can remember the dot com bubble and then it's melt down here not being very well versed in bitcoin what is going on here is this just speculation or is this the new shiny radiant
future go ahead in cambridge. right i think i think a little bit of both to be honest and certainly we've seen you know some aspects of this story before as you mentioned you know after the dot com bubble exploded in two thousand two thousand and one there were a number of winners that emerged from that area and a number of new companies that were born after that have done quite well you know big has already been declared dead several times in two thousand and eleven wired wrote an article saying the rise and fall of we saw the crash in two thousand and fourteen yet it keeps coming back so wouldn't surprise me if we have another crash maybe a few more in front of us but it does seem that there is something important happening here with regards to the future of finance the future of money yeah well at least for a small number of people who become least i guess technically in the clouds somewhere fabulously rich it's really an amazing story jeffrey i mean gary called this i think in an article a minor miracle is that it would you use the word miracle here let me go to jeffrey in atlantic. i read that article and i of i appreciate that term actually it kind
of has nobody ever thought anything like this was possible before two thousand and eight before the white paper of two of october two thousand and eight we didn't really have the means to do what the block chain does today just for background to block changes the real underlying technology of the coin in the real reason for its value going to just an expression of that logical value. allows us to do something we've always wanted to do something for world but never had the ability to do it thanks to these distributed networks and cryptography we can do it you know mitigates against jeffrey kind of put it in the same cli for me because you know i was in finance for a number of years and there's always you know what's it backed up by you know you know what are the assets you know you know you always look at that and then but what jeffrey just said there kind of explains it it's the technology is the safety that's what backing it up here do you buy that because you know you can say this is a scheme it's a get rich but i mean there is something to it and people are making money here and
you have to makes everyone interested to get involved in it if you have the means go go ahead mitch how do you explain it all. well i mean we need perspective i think bitcoin has come about in a time where the central banks reckless central banks around the world has distorted every market and too much credit too much debt and too much leverage have created instability in the financial markets so we need to add perspective so we need to look at risk versus reward with bitcoin and the bitcoin trade so bitcoin has gigantic volatility you're seeing thirty percent moves either way in a day or forty percent moves for us so it's not for the faint of heart so you know my perspective from an investor and being in the banking community internationally for thirty eight years you look at the iconic figures like jamie diamond who said it's a ponzi scheme and it's going to zero he's totally wrong but the establishment banks and the way that the fractional banking system works people want to escape from that people want to escape from the establishment but what we've got going on here
just to be clear is we've got inflation in every asset class stocks are trading at stratospheric valuations apple has a market cap approaching eclipsing one trillion dollars facebook at six hundred billion so if you look yesterday a couple sorry if you look. recently you saw a poll back in the nasdaq the fang stocks facebook apple and all the technology issues they lost sixty eight billion dollars in market cap in a day where the market cap of bitcoin is what around one hundred sixty million dollars so on a relative basis it's a much smaller move and it's a very emerging market so i think we've got to look at where we are in this in alternative asset class i mean you're looking at are a leonardo da vinci painting trade that run one hundred fifty million dollars so i mean we need to put it into the proper historical perspective now stocks are way overvalued so are bonds and so is property so people are looking to get out of the
dollar system and i happen to agree you need to diversify but i think you should also get. some precious metals gold and silver which have been currencies for some hours and years i mean dollar is backed by fundamentally not nothing ok good let me go back to cambridge carol i mean there's a lot of people are saying that. large investors are getting involved in trysted in bitcoin is that distorting the price because they have the deep pockets that this price level to get into the market is there something behind out there that you know that because i having been in finance i mean this is this is speculation ok i mean that people are not buying on facts or buying on speculation right now go ahead in cambridge. right i think certainly the hedge funds the big whales that are coming in the billion the billionaires we read about you know are certainly influencing the price direction but i think there's still a lot of money on the sidelines i was at a hedge fund conference recently and less than twenty percent of of the funds in
the room there are some pretty big funds in the room have taken a step into this space and i think the ones that have a lot of them have done so as individuals rather than putting their funds in because you know it's still very difficult to short yep there's major counterparty risk a lot of the exchanges cryptocurrency exchanges will do things like reveal their financials or audited financials to fund so things that you know hedge funds are used to having in typical markets they trade in are not in place yet here but they're coming if see i mean nasdaq do come into the market with futures platforms you know if things like e.t.s. and you know other things roll out bring more regulation to the space then i think you will see even more hedge funds come in the price you know could go either way frankly i think the investment playing field has been a bit lopsided in favor of the bowls and that could level and a lot of the hedge fund guys are passionate about crypto and frankly they would probably i think from a psychological perspective prefer to make money if it crashes on the way down the
well that would certainly help them rationalize their lateness to the bartunek you know market you know jeffrey is very interesting is that it's i think one of the interesting phenomena about big calling is that it's a lock of regulation and going back what mitch had to say here and we have to remember this phenomenon came into being after the financial crisis crisis of two thousand and eight which the banks were responsible for and so it's an element of that here is because that the freedom of here but the go ahead jump in go ahead . yeah you know there certainly is the i think of the success of big kind is in part attributable to the fact that it has not been managed from the center is not been regulated and that allows a lot of innovation and for people to try out things you know you want to talk about market caps you can talk about one hundred fifty billion for a big client but really you have to look at the whole class of crypto assets right now and you're looking at last i checked about three hundred fifty billion once you
include all the various tokenized block chan's that are out there all the various the ferry m applications the various all coins and we're just beginning to see things we're going to see things coming up within the next year like these lightning networks that are going to be used for small transactions that are going to fix the prevailing problems that exist in decline which is that the networks are vastly clogged right now and it's very expensive to send and receive bitcoin it's going so hard so fast as almost become unusable just by itself for regular small transactions that that's their grades are looking for things like oh yeah that's the reason why i never really got into it because it's not easy to move around lease i'm not adept at doing those kind of things or you know mitch another the other people are saying that this whole thing with a big point it's really just an investment it's not really. a mechanism to buy and sell it is to park your money somewhere and leave it there because you don't trust
the banks i mean it for it to be really universal you have to be able to be able to use your wallet as they call it you know and buy things and sell things it's not that easy to do it's not widely accepted you know many more innovative people do say they accept the go ahead midge. it's part of you know it's part of a diversification strategy where you'd have some big going to just sit on it not worry about what your basis was and whatever losses are you're going to eat the losses and if you get a profit out of it fine but you know it when you have that much volatility you know i disagree that the big hedge funds will get involved in this when you have a thirty percent volatility swing each direction so from peak to trough and back up again down and up again i mean no investor wants to tolerate that kind of volatility and how can you manage that kind of volatility becomes very difficult so are the hedge funds and the banks going to jump in head first up at these levels probably not if we get a more bit a bit more stability into these markets you'll see more investment but also from
that risk reward perspective you've also got to keep in mind this is a non regulated market that's the attractiveness from people but governments have overreach like we're seeing in the media right now the deep state runs america they're trying to rewrite history here with these statue wars and that's always a dangerous time so if too many people get on the bitcoin train and get on the crypto train the government could come in one day and say it's illegal in this country we're cracking down on everybody because right now when you open up an account they they demand the k y c know your customer information and they they will when it becomes bigger they will try to regulate it and they will try to control it it's difficult for the government to let anything come out of it's you know come out of its grasp the federal reserve prints willy nilly trillions and trillions of dollars since we went off the gold standard backed by nothing now that this is a ponzi scheme the government that's what my book is about the government debt globally is a ponzi scheme the governments can never repay this debt and we're about to hit
a wall so should people invest in alternative asset classes absolutely is a leonardo da vinci painting we're painting worth half a billion dollars is an apartment in midtown midtown manhattan worth six hundred million dollars i would argue no it's not and i would agree we should prices from when i went to university have gone up to. thousand percent yeah where real wages since the one nine hundred eighty s. are flat so how does that work out when i got out of school i could've bought a better mission they let me let me jump in here in fifty thousand gentlemen no i have to go to a break and after that short break we'll continue our discussion on bitcoin staying with our.
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welcome back to crossfire. all things considered i'm peter remind you we're discussing bitcoin. here let me go back to you in cambridge while it is a fascinating concept these cryptocurrency if there is the concern of accountability illegal drugs arms and other kinds of illegal activity can stay under the radar of the authorities i mean i think that's a kind of a downside also you know when people talk about it is being a new fee currency one day i mean you know people are buying big ticket items because they are avoiding taxation in things like that so i mean aig.